Cayman’s Action Plan Includes Beneficial Ownership

Published 18th June 2013, 5:13pm

The Cayman Islands is committed to continue working with other nations towards the full implementation of the revised Financial Action Task Force (FATF) standards, in order to improve transparency of the ownership and control of companies in a way that ensures a level playing field across the world. This is a matter of good governance, as well as a means to tackle a wide range of illicit activities.

Collection and maintenance of beneficial ownership information by corporate service providers and trustees of express trusts has been a legal requirement in Cayman for more than a decade. The obligation on trust and corporate service providers to collect, update and retain such data is enforced through a regime that mandates a licensing process for trust and corporate service providers, and an ongoing programme of supervision and enforcement action that involves onsite regulatory inspections.

The Cayman Islands supports the high standards set by the revised FATF recommendations, including recommendations 24 and 25, and is committed to continue making progress towards the full implementation of these standards by undertaking the following actions.

Conduct, and share the findings of, a national assessment of money laundering and terrorist financing risks by 2015, through co-ordinated action by the public and private sectors to assess risks, apply resources and mitigate those risks.

Further evaluate established policies and legislative measures to ensure that information on the ownership and control for companies and express trusts continues to be effectively and accurately maintained, and that this information continues to be readily available to the appropriate authorities.

Conduct an assessment of whether a central registry of the beneficial ownership and control of companies is the most appropriate and effective way to improve transparency in support of domestic legal compliance and the implementation of cross border assistance in accordance with internationally adopted and implemented standards during 2015.

Continue the longstanding supervision of those who execute company formation in the Cayman Islands, and keep the regulatory regime under review.

Conduct a review of supervision and regulation of the financial services sector, including category A and B banks, during 2015 to establish effectiveness of supervision and enforcement of existing rules on beneficial ownership.

Further review corporate transparency including the use of bearer shares (all of which are already immobilised and subject to regulation in the Cayman Islands) as recommended in the Phase 2 Peer Review Report by the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes, by 2014.

Maintain our high standards of international cooperation, including the timely and effective exchange of basic and beneficial ownership information on legal persons and arrangements.

Continue to negotiate and enter into international tax cooperation agreements and arrangements under the entrustment of the United Kingdom, where appropriate, including tax information exchange agreements and double taxation agreements; intergovernmental agreements in support of automatic exchange of tax information (such as under the United States Foreign Account Tax Compliance Act); and the Convention on Mutual Administrative Assistance in Tax Matters.

Background Notes on the Cayman Islands Regime

All companies are required to be registered and provide basic information to the Registrar of Companies. In addition, every Cayman company must maintain a registered office in the Islands. For exempted and non-resident companies, this must be located at the address of a licensed service provider.

Common Law requires trustees to hold information on settlors and beneficiaries of trusts. Persons conducting trust business must also be licensed service providers, and are therefore subject to regulations as well as obligations under Cayman’s Money Laundering Laws and Regulations.

The Money Laundering Laws and Regulations set out the requirements imposed on trust and corporate service providers in respect of identity information of their clients, including collection and maintenance of beneficial ownership information. The Cayman Islands Monetary Authority regularly conducts onsite inspections of service providers to monitor compliance with the relevant regulatory laws and obligations. Compliance with these laws and obligations is very high.

The Cayman Islands has signed 31 bilateral arrangements for the provision of tax information. Information held by service providers can be readily accessed by regulatory and law enforcement authorities. The Phase 2 Peer Review Report published in April 2013 confirms that in all cases where ownership information was requested it was made available.

Third-Party Endorsements

Professor Jason Sharman (2012) Research conducted by Professor Sharman of Griffith University in Australia found that Cayman had a ‘perfect compliance record’ in terms of collecting all of the identify information required by the Financial Action Task Force’s anti money-laundering regulations.

International Monetary Fund (2009) – ‘(The Cayman Islands) legal framework is comprehensive, the money laundering offense is in compliance with...the requirements of the UN Conventions, and the terrorist financing offense is in line with the FATF standard. Law enforcement and prosecutorial authorities are adequately empowered and competent to investigate and prosecute money laundering and terrorist financing offenses. The system for the confiscation, freezing and seizure of the proceeds of crime is comprehensive’.

Caribbean Financial Action Task Force (2007) The third-round evaluation of Cayman’s AML and CFT regime assessed the jurisdiction as ‘compliant’ or ‘largely compliant’ with 38 of the FATF 40+9. It also found that Cayman was fully compliant with recommendations 33 (legal persons) and recommendation 34 (legal arrangements).

For more information, please contact the Financial Services Secretariat at (345) 945-5819 or via email at financepr@gov.ky.